Aave V4 shifts governance

Aave has rebuilt its lending system in Version 4 so one pool can supply cash while separate markets carry their own risk rules and loss limits. (aave.com) In Aave Version 3, each market was a self-contained pool with one risk profile. In Aave Version 4, a Liquidity Hub holds shared assets and Spokes set borrowing rules, collateral policies, and liquidation logic on top of that pool. (aave.com) Aave Labs said Version 4 went live on Ethereum mainnet with three initial Liquidity Hubs, called Core, Prime, and Plus. The launch post said the system shipped with unified liquidity and a narrower initial configuration designed to start conservatively. (aave.com) The new setup changes governance by letting the Aave decentralized autonomous organization decide, asset by asset, how much credit a Spoke can draw from a Hub. Aave’s documentation says those credit lines are capped per asset and enforced on every transaction. (aave.com) LlamaRisk, a risk service provider to Aave governance, said the design lets one market take exposure to a specific collateral type or borrower segment without forcing the entire liquidity base to absorb the same liabilities. Its January 20, 2026 analysis described the architecture as a move away from a “rigid, singular deployment model” toward modular configurations with distinct trade-offs. (governance.aave.com) TokenLogic, another Aave governance contributor, said the model allows each Spoke to define its own risk appetite while still drawing on shared Hub liquidity. Its February 11, 2026 forum post contrasted that with Version 3, where each market acted as a silo with one bundled risk profile. (governance.aave.com) Aave Labs framed the change as a way to add new markets without migrating all liquidity into a brand-new pool. The protocol documentation says governance can introduce new features or market types while keeping the Hub as the common balance sheet. (aave.com) That matters for assets that do not behave like plain crypto tokens. Aave’s development update said the modular design was built to support asset classes with unique characteristics, including differentiated borrowing costs, dynamic reserve configurations, and updated liquidation mechanics. (governance.aave.com) The initial governance configuration published in March 2026 laid out 3 hubs and 10 spokes at genesis, with Core serving as the general-purpose hub and the main source of inter-hub credit lines. Prime was pitched at suppliers seeking Ether and Bitcoin collateral exposure, while Plus was designed for higher-yield strategies. (governance.aave.com) Aave’s March 13, 2026 activation proposal said the first Ethereum mainnet deployment used “conservative risk parameters” and a “deliberately narrow” Hub and Spoke setup. The immediate test for governance is whether that narrower map can expand without blurring the line Version 4 draws between shared liquidity and isolated risk. (governance.aave.com)